317. The WeWork Conundrum: Why Unit Economics Matter and How Independent Operators Can Succeed

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317. The WeWork Conundrum: Why Unit Economics Matter and How Independent Operators Can Succeed

00:00:02,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how toss in Coworking. I owned and operated Coworking spaces for eight years and then served as the executive director of the Global Workspace Association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you thought provoking operator case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry."

00:00:48,"Welcome to the Everything Coworking podcast. This is your host, Jamie Russo. I hope you are doing well. It's been a little bit since I've done a solo episode. Today we're gonna talk about WeWork and why WeWork's model is different than the model of the independent operator and why that matters a lot because WeWork is failing and independent operators are succeeding. So we're gonna dive into that."

00:01:17,"So what's happening out there? I am going to the G W A conference next week. I can't believe it's next week already in, it's technically in Maryland at the, I think it's called the M G M National. We were there in 2019 pre pandemic. So it'll be fun to be back. It's a giant hotel, already have the app open and saying hello to people who will be there connecting with folks that I have not ever met before who will be there."

00:01:47,"We're gonna do some space tours. I'm going in early and gonna do some space tours on Tuesday. Yeah. And then I have a trip this week to a market with, to visit an asset owner that is about to be given back a very large space. And this is kind of related to this WeWork topic, right? Like there are lots of folks asking the question,"

00:02:13,"why are independent operators different than WeWork? So our team works with folks who are independent operators who are starting their first space. We alway are also are doing a lot of work with landlords who are wondering if they should be opening flexible office space in vacant space that they have, or what they should be doing if they're given back a space, WeWork or other."

00:02:37,"So I have a visit this week for a non WeWork location. I have a visit after the G W A conference for a space that is a WeWork location. And the landlord is wondering, what am I gonna do with this if WeWork decides to renegotiate or try to get out of the lease, et cetera. So helping folks understand from the smaller independent operators all the way up through major asset owners,"

00:03:02,"you know, why is WeWork different? What else is going on? We're running in the middle of our live cohort of the Coworking, Startup, School. So anybody who's listening, who's in the cohort, we're super excited to have you there. Can't wait to see everybody on Thursday. We are going through phase one, which is validating our numbers, which is kind of related to what we're gonna talk through today."

00:03:24,"Not the same process, certainly, but yeah. So what, let's maybe we'll just dive in here. Okay, so we're gonna talk about why WeWork is different than an independent operator. And there are lots of reasons for this and lots of analysis going on around this. But the way I'm gonna go at it is looking at the fact that independent operators are very concerned about the unit economics of a location typically."

00:04:01,"And WeWork is not. WeWork is very focused on growth and not as concerned about the unit economics, which is why when the growth slows, you know, pandemic and they make decisions based on growth, the units are not profitable and that's when things start to really go wrong. So I may be oversimplifying this, but I'm just gonna kind of walk through this kind of basic view of what's happening here."

00:04:26,"So we're gonna talk about that. So first I wanna just go through a quick history of WeWork's growth because this is another factor, right? Related to how they're very growth oriented and not focused on the economics of a particular location or unit. So they started in 20 2008 with a brand called Green Desk, which was an echo friendly Coworking space in Brooklyn."

00:04:53,"By the way, if you have not watched We Crash yet, I did not get through the whole thing. I found it kind of painful. I also am not really a watcher, I am a reader. The only thing I watched is Ted Lasso, although I did see the Barbie movie last weekend and was really pleasantly surprised with how well done that was."

00:05:11,"And of course, Ted, lasso fan forever. I've been saving season three and have finally started to dive into it. I just, I love everything about that series. But anyway, I'm not a huge watcher. I did watch some of, we crashed and it felt like watching a train wreck, it was very insightful around the personalities and kind of what was happening there."

00:05:34,"I, I may have to watch a little bit more. I do have some plane time coming up, so I might watch a little bit more of it, but if you haven't and you just wanna get a flavor for what the culture was like, what Adam Newman is like, and Miguel, it, you'll, you'll really start to get like, how could this have happened?"

00:05:53,"So they established Green Desk in 2008 and then they sold Green Desk in 2010 and started WeWork and they were, you know, really focused on shared work face spaces for startups, freelancers, small businesses. I will tell you, I have talked with folks who were members at WeWork in those early days and they still really have very fond memories of it being very sort of magical."

00:06:18,"You know, New York is a hard place for younger people, for startups, you know, big cities are amazing in so many ways and also lonely, right? And so we work with this like really first, you know, at scale concept where people could go and, you know, kind of take their risks with other people. And the community aspect was really important to the members."

00:06:40,"They made friends, yes, they went out a lot. Yes, they drank a lot of alcohol. You'll see that from we crashed, but for some people that was, you know, really made a difference. And so I don't wanna belittle what WeWork has done for the industry by any means. They've absolutely made Coworking mainstream, but now they're, their,"

00:07:01,"their struggles are I think putting sort of casting a shadow over independent operators who are trying to say like, look, we can be successful. Okay, let's keep going through the WeWork story a little bit. I'll keep this short. But 2011 to 2015 was a period of like really rapid expansion. They had not yet raised their SoftBank money, but they did open a second location and they secured roughly 7 million in series A funding."

00:07:29,"And then in 2012 to 2014, they started expanding outside of New York City. This was still pretty early days, by the way. I started my location in Chicago at the very beginning of 2012. Like we, we opened in January and you know, I share my personal story pretty often. There was like still nothing on the internet about opening Coworking spaces."

00:07:52,"There were definitely brands before WeWork. Shout out to Sam Rosen who had been operating a small location in Chicago and then subsequently expanded into a bigger location. Jerome Chang, the Brooklyn Creative League, I think was around then. There were brands, I'm leaving some out for sure, there were other brands around, but WeWork started kind of the, was the first brand to really go at scale."

00:08:16,"Us outside of, you know, sort of the traditional executive suite locations. So the Regis, the Serve core Pacific Workplaces is a local brand that had been operating for, you know, years and years before this. But, so 2012 to 2014 they expanded outside of New York City into San Francisco, Los Angeles, and then London. And they raised more money with valuations in the building."

00:08:41,"And you have to, let me scroll down a little bit. Okay, so they, WeWork raised a lot of money from SoftBank over multiple rounds of funding. So SoftBank is also a little bit controversial because I think the founder of SoftBank made his money from Alibaba. And the sort of view may be that he got really lucky with that and is not necessarily a very skilled investor."

00:09:07,"So, but loved Adam Neuman put a bunch of money into WeWork, which is when you start throwing economics out the window, right? When you have, so in 2017, SoftBank and its vision fund invested 4.4 billion into WeWork. And that is when you know the, the growth started to really explode because when you have billions of dollars in funding, you have to spend it."

00:09:36,"The investors don't want that money sitting in the bank, right? They're funding growth. And we'll kind of get into the difference between, you know, growth businesses and unit economics focused business. But this is where they're really started throwing unit economics out the window and said like, also, I should mention this period of time, especially in Manhattan, even I'm sure their location in Manhattan was profitable and their initial expansions,"

00:10:04,"although I do get start to get worried around that time in San Francisco, I mean they were, you know, they were paying, you know, $90 a square foot in rent in San Francisco, probably Manhattan and probably other, you know, major markets like London. And, and so you wonder if you, you know, have stared down a,"

00:10:23,"a p and L for Coworking, like how do they make that work? You know, really lean staffing, really dense layout that probably, you know, got denser over time. So it may be that even those early locations were not that profitable. But certainly the ones in New York City probably were, I remember talking to operators in New York City who were early and they would just fill up when they opened."

00:10:44,"And not even offices but open space because Manhattan is one of those markets where like nobody wants to be at home because people live in studio apartments or they have roommates, they have no space. So if they're running businesses or just need to do work, you know, Coworking is such a compelling solution in a market like Manhattan. So early on, all those brands were doing well and it was kind of coming easily if you ran,"

00:11:09,"you know, a decent, a decent location. So anyway, 2017 was when they really started raising their SoftBank money. So 2016 to 2018 they started expanding globally. They did some things like 2016. All of this seems like yesterday, which is crazy. They launched, we live and expanded into Asia. We live, I don't think is anymore 2017."

00:11:36,"I thought it was later than that. And actually this came from chat G P T, it might be wrong in 2017 it says they acquired Meetup, I'd have to fact check that, which was a social, you know, networking platform. And they moved into Brazil, Argentina, and India. And then by 2018 they had his 200th location and they rebranded as the WE company."

00:11:58,"And their valuation was 47 billion by the end of the year. So a lot going on. So their fundraising, again, 2017 they invest, SoftBank invested 4.4 billion in 2018. They considered investing 16 billion but didn't end up doing that. But they did put in an additional 2 billion in 2019 through the vision fund. And then in October, 2019 is WeWorks failed attempt at an I P O and then their kind of associated crisis."

00:12:33,"I want to interrupt you for a minute. With a special offer, if you are an operator that is getting ready to launch or your space is less than a year old and less than 200 members, office r and d is piloting a program called Flex Startup program, which allows you to save 50% on your first year with office r and D Flex to help you grow your Coworking space."

00:12:59,"As many of you know, I run programs that help operators launch. I run mastermind programs for operators that are in business and a Community Manager program. And we have lots of members that love using r and d office r and d. It's kind of an all-in-one platform that has fantastic analytics, meeting room management, lots of integrations, all the things as I like to say."

00:13:25,"So it's a fan favorite of the Everything Coworking program members. So I'm excited that you get a chance to kind of get started with it at a discounted rate. So 50% off of your first year, you can learn more about the offer and sign up for a demo by going to Everything Coworking dot com slash org d that's Everything Coworking dot com slash org d We'll also throw that link in the show notes."

00:13:57,"So if you open your podcast app, you can grab the link right there. And remember that throughout this time period they're measuring and sort of reporting their success through metrics like community adjusted ebitda. Like nobody could figure out, you know, are these guys really, are they really profitable or, or not? And through all of that time, I think anybody who is an operator,"

00:14:26,"you know, I was, who could read a p and l was just like, I don't get it. You know, it's not a tech company. And through this time they were hiring really incredibly talented people. I mean, they took people from the brokerages, you know, from, from a lot of, a lot of really great talented folks,"

00:14:46,"left great jobs to go to WeWork and to build that business. So they were selling a really compelling story. They were doing a lot of enterprise work, they were working on technology platforms, but they were not a tech company, right? They're, they're a Coworking company and it's really hard to argue that they should, they should get valuations of a tech company and that there was any way that they were really operating in that way."

00:15:11,"And so they were telling, but they were telling that story and the investors really believed it. And at the same time, any of us who actually, you know, ran a p and l were like, I, how could this be? How, how could any investor be looking at this and sort of be buying what they're selling? But they were really,"

00:15:30,"really good at storytelling, which again, you'll get from watching. We crashed. So, you know, in 2019 they changed the name officially to the We company tried to file the I P O 2019 is when Adam Neuman stepped down. And then, you know, since then they've really been trying to work through the pandemic and really adjust, you know,"

00:15:51,"how they operate. So, okay, so let's talk about, you know, WeWork versus the overall Coworking space industry and talking about their approach to growth and to their lack of focus on unit economics and the strategies employed by independent operators. So, okay, let's talk about like what, what, what is, what is the definition of unit economics? It's probably easy to use an example."

00:16:21,"Okay, so imagine you have lemonade stand and you want it to be profitable. So you calculate that for each cup of lemonade you sell, you need lemons, sugar, water in a cup. My, it's still sitting in our garage. My daughter and I made the most fantastic lemonade stand. I might post a picture of it in the show notes,"

00:16:40,"it's so stinking good. It is my like Pinterest moment of my lifetime. I'm sure I must have found this like pattern or plans. It was, we had to sort of build it and go to Michael's and get all the stuff and I spray painted it. You could still see the blue spray spray paint in my, my garage on the floor. It was very compelling."

00:17:04,"And I remember kind of walking through this with my daughter who thought at the time, I mean she was probably six, thought that I should buy all of the, you know, cost of goods and that she should just walk away with a profit. But anyway, think about a lemonade stand. You need lemon sugar water in a cup. Let's say all those things cost 50 cents per cup and then you sell that cup for a dollar."

00:17:25,"So you earn 50 cents as profit after taking away your cost. So the unit economics in this example is for each cup. So it's the unit economics is figuring out how much it costs to make one cup of lemonade and how much profit you make from selling one cup. And so it helps you understand if your lemonade stand can make money in the long run."

00:17:47,"I will also tell you that chat G B T gave me that example. So thank you. I did ask it a good question, but it gave me that example which I liked. And then I asked chat G B T. Okay, help me explain how a company might be focused on growth versus unit economics. So if you're WeWork, WeWork said,"

00:18:05,"okay, this is like a lemonade stand that wants as many people as possible to taste the lemonade, even if it means losing some money or a lot of money in WeWork's case in the beginning. So they might give away free lemonade or sell it really cheap and get lots of customers and then they hope that later on those people will keep coming back and tell their friends."

00:18:28,"Making the lemonade stand really popular. It's like trying to have the biggest party, even if you have to spend all of your pocket money on it. And so you don't care if the party's profitable, you just want the biggest party. So that's not exactly, we work for sure was focused on profitability eventually, but to use the lemonade analogy, giving away free lemonade or selling it really cheap."

00:18:53,"So they would do things like say, hey, if you leave your current lease, we'll give you free membership for a year and then after a year, here's what you're paying. Or they after, certainly after the pandemic, they kept prices really low to get occupancy up. This is really challenging in our market because if you, I run pro formas for people all the time,"

00:19:15,"and the seat, the cost price per seat is a significant driver in a pro forma, right? So when you're deciding, okay, is my average price per seat going to be 400 bucks, 500 bucks, 600 bucks, that multiplies across the hundreds of seats that you have in your location. And that multiplier makes a giant difference. So if you have a hundred seats and they all sell for $400,"

00:19:41,"that revenue over years is a big difference. If you can sell those seats for 600 bucks times a hundred over years and years of revenue, right? So being focused on keeping your price up from the beginning and not getting folks in there who are only willing to pay 400 bucks a year a seat per month, and then you know, they leave when you try to go up to 500 bucks or god forbid 600 bucks a seat."

00:20:10,"But that really can make or break your model. The model is very, very sensitive to that price per seat. It's sensitive to rent increases, it's sensitive to a lot of things. It's not that easy of a model to run. You have to really know your numbers and understand the model. But again, WeWork has $4 billion from SoftBank in the bank and they are trying,"

00:20:30,"$4 billion is a lot of money to go sign leases. Are you working on starting a Coworking space in 2023 or even 2024? We want to make sure you are set up for success. You hear me talk about this a a lot. The biggest mistakes made in Coworking businesses are made before you ever open your doors, before you ever sign your lease, your lease,"

00:20:58,"your product mix and ensuring that your real estate deal and your offers align with your ideal future members are everything in terms of making sure that you set your business up for success. We can fix your marketing and your paint colors and your bathroom fixtures anytime, but we cannot redo your real estate deal or your product mix. We can, it's just really expensive."

00:21:23,"So we wanna help you get all of that right and be among the Coworking space operator operators that are sleeping well at night because they signed the right real estate deal and they know that their business is set up for ongoing sustainability and set up to meet their financial goals. So we'd love to have you join us in the Coworking Startup School. We cover getting started with your real estate search and signing your lease and picking your product mix and more."

00:21:51,"If you already have a location, over half of our members are already building owners, you can get all the details of what's covered in our program at Everything Coworking dot com slash start. So they're building tech platforms and they don't, you know, unit economics would say, okay, if we build a tech platform, then we have to allocate the cost of that platform to each of our 200 locations and those locations still have to be profitable."

00:22:21,"Well, WeWork did not care about that. They just make the tech platform or they just hire the people to go prove out an enterprise model. They don't take the salary of the enterprise salesperson and allocate it across 200 locations like you as an independent operator would do and say, okay, are the locations still profitable if we allocate these salaries? No, they just say,"

00:22:44,"we have $4 billion in the bank, just grow. You know, just make the platform, hire the people, keep going. And eventually when this all settles out, we will have, you know, X number of locations and these types of platforms and this is how we'll be making money and we will be profitable someday. Let's not worry about that right now I'm oversimplifying,"

00:23:05,"but okay, so a company like probably you, the independent operator who is listening that is focused on unit economics, is much more careful. So the lemonade stand is thinking about making sure that every cup they sell earns them some money. So again, if it costs 50 cents to make a cup of lemonade, we're gonna sell it for a dollar. And we wanna make sure that every sale is profitable."

00:23:29,"So it's like hosting a smaller party, but making sure there are enough snacks and games for everyone without spending all of your pocket money. So in the long run, the first lemonade stand hopes, which is the WeWork version, hopes to make money once everyone knows about them. But the second lemonade stand, probably you, the independent operator or you the landlord that wants a profitable space."

00:23:51,"Make sure you're earning money right from the start. And by start we don't need mean day one, you need ramp up time, you need stabilization time. But the plan is that this location is going to make money soon, not in 10 years when everything you're working on plays out because you have a lot of money in the bank. So WeWork was not worried about unit economics and this is something,"

00:24:16,"this is how you wanna think about explaining to yourself, explaining to lenders, explaining to landlords that you're pursuing that you are different from WeWork, you are focused on unit economics and being profitable right away within a reasonable amount of time. And if you plan to do expansion, then you are still going to work at worry about profitable unit economics. And I will note here that this is actually really challenging for operators who are growing."

00:24:49,"And we did a, how I did this session on this and had an amazing panel and I am gonna link up to that recording in the show notes. It was talking about, you know, how does one expand and still retain unit in economics? We did not actually use those terms when we were doing this panel, but that's essentially what we were talking about."

00:25:13,"And if you have one location, two locations and you're trying to get to five, it's very hard to maintain profitability across your units because you're adding overhead. So if you hire a salesperson or you hire a head of marketing, some, if you're trying to create, you know, an executive team or you know, leadership roles that cut across your locations,"

00:25:38,"they need to be paid for by the locations, right? So you, if you're paying a hundred thousand dollars to a head of marketing, then you need to allocate that salary. If you have five locations, you're gonna allocate $20,000 of that salary to each location. So those locations need to be able to absorb that expense and still have a reasonable margin."

00:26:01,"So if your target margin is 20%, can that location handle that $20,000 a year allocation for the head of marketing? That can be tricky. And so independent operators may say, okay, while we grow, we are going to accept a lower margin per location. But we have planned this out such that when we get to say we have five locations now when we get to eight locations,"

00:26:28,"we'll then things really start to rock and roll. And this leadership layer that we put into place really has a, has a an R O I and the margins on these locations go back up. So between five locations and eight locations, we're taking a margin cut, margin cut, but once we grow past that, we can get from eight locations to 12 locations with the same team,"

00:26:50,"right? So you're really thinking carefully about planning out what does growth look like, how do we maintain a reasonable margin, and then where do we get back to our target margins? We work with not worried about any of those things. I, I mean they may have been to some extent, but like largely not worried, right? And so they were making decisions that just did not consider those factors."

00:27:13,"So we look at WeWork and the number of locations they had and they had this illusion of success, but they were relying heavily on venture capital and external funding rather than self-sustaining revenue. And growth in this industry is really hard because of that, of, you know, how do you create, but that's the, that's true for almost any business, especially one that relies on brick and mortar."

00:27:39,"But scaling, you know, versus preserving margins is a really challenging aspect of running any business. And I will give a shout out to, there's a podcast, I've mentioned it, you know, maybe a couple times, I think it's called The Catapult and I think it's called Catapult. I'll have to look the, I'll put a, I'll put a link in the show notes and it is produced by Cultivate Advisors."

00:28:07,"I'm looking in my little playlist right now and they talked about this very problem recently and I found their discussion to be, I, their podcast is in general quite good. I used to do coaching with them way it's been a while, but way back in the day they were in Chicago. Yep. Catapult Your Business is the name of the podcast and Cultivate advisors is the company."

00:28:29,"So they do a lot of great episodes and they talked about the challenge of growing and maintaining margin. So this is a common challenge. So WeWork look successful because they have really fast growth, but their, their unit economics are crap. So they, you know, high fixed costs, low profitability per customer and generally no clear path to profitability, which is now they're in the situation that they're in,"

00:28:57,"they now have assets that are in the wrong locations. They're very C B D oriented, CBDs are struggling, you know, post pandemic brands that are focused on suburban locations, close to home, smaller footprints potentially. You know, WeWork was really going after scale. So they'd have locations that were 50,000 square feet and often higher. And so that those just are not filling up as they used to and they're having to lower prices and make a lot of concessions in order to get folks in the door."

00:29:30,"So the independent operator advantage, again, goes back to them being you being really focused on unit economics and knowing your numbers and understanding those u unit economics is so critical. That is, you know, sort of the core of our business is helping folks really know their numbers, validate their numbers before they open a space. And then once they've opened a space,"

00:29:56,"continually checking on, you know, pricing margin, how they increase revenue, what other revenue lines can they leverage, et cetera. So when we see successful, and I see them all the time, I just looked at a pro forma recently of an independent operator who has about 20,000 square feet and they're, you, they have multiple locations. So they do have allocations,"

00:30:20,"you know, overhead allocations that they're taking at the location level, but it's a beautiful location. It is built out in a very, like, you know, attracts their ideal customer avatar. They have really high occupancy on their offices, they have some event revenue, they're working on their mail and virtual office revenue, but they have roughly a 30% margin and it's a very profitable location."

00:30:46,"So I look at proformas all the time, some are not profitable certainly, but when planned out really well validated and they go through the framework that we teach, either they've gone through it with us or you know, they kind of in intuitively knew how to go through it. That results in very good unit economics and success. And independent operators are, again,"

00:31:12,"they're really focused on that. They're focused on making good business decisions, they have closer relationships with their customer base, they have better understanding of local markets, they're more engaged in local markets, and a focus on sustainable growth versus aggressive expansion, which we kind of talked about. Like you might take some margin hits for a short period of time, but it's intentional and sustainable."

00:31:36,"It doesn't make you unprofitable usually. So I would say, again, in general, I'm gonna link up to that how I did this session that we did with a group of panelists who talked about scaling sustainably and some of the strategies that they've used. Again, not easy, but it's doable. We did, Giovanni and I, we have a podcast called Flex Uncensored and it just went live."

00:32:02,"But there's a woman from the executive center who's mostly operates in Asia and they have, I think they have 75 lo no, they have 175 locations. They mostly operate in Asia, which is why you may not heard of them, have heard of them unless you're located and listening from Asia. But she talked about even at that number of locations, they are just really,"

00:32:24,"really focused on looking like compiling demand signals before they add a location. So they're gonna be like really, really 150% sure that this location has enough demand to add another location. So they are very focused on the unit economics, even when they're already operating in a market and see some opportunity. They are doing extreme due diligence and demand gathering, building wait lists,"

00:32:52,"all sorts of things in order to validate that they need another location in a market. And they already have 175 locations. So this is like the opposite of WeWork and they're a premium B brand. They, anyway, I, I thought that was a, a really interesting aspect of our conversation. That interview was, was with Chelsea Perino on the Flex Unensured podcast,"

00:33:15,"if you want to listen to that. So let's talk about WeWork's failure, that it doesn't reflect the opportunity for the Coworking industry. That is super important. Now again, there are always markets that are gonna do better than others. You know, we internally, anytime we get somebody from Florida, we're like home run. You know, there are markets that just continue to do really well and there are markets that are challenging that still don't know Coworking that are smaller,"

00:33:45,"et cetera. But there's, the Coworking is growing. So let me give you some growth stats. This is kind of, you know, pre pandemic. Pre pandemic. The annual growth of the Coworking industry globally was 20 to 25%. We think that slowed a little bit to closer to 20%. That's still incredible growth and that's not going to be reliant on only WeWork."

00:34:07,"Certainly there are other large brands like Industrious, other regional brands that are growing quickly and contributing to that growth, but it's also a very fragmented market. And so a lot of that growth will be from independent operators, like those of you listening. So we certainly will continue to see growth. We're figuring out where is that growth going to be greatest, where is the best opportunity?"

00:34:35,"That's where your understanding of your local markets and doing that validation work is really important. And we, in our Coworking, Startup School, we do that with our students. We do that on a done for you basis for landlords. We do market validation processes and go through the whole, well, the first few steps of our framework to determine, you know,"

00:34:57,"do you wanna operate a Coworking space? Do you wanna have somebody operate it for you? Do you wanna operate it yourself? But you know, what is the opportunity in this market and what do the numbers look like for your particular particular location? So independent operators I think will, will play a role in the future of our industry in creating sustainable growth and really great operators like the industri,"

00:35:20,"like the mind space, like there are folks who are doing this really well, partnering with landlords. So my, some, some parting, you know, requests advice, stay focused on those unit economics, you've gotta know your numbers and if you're not comfortable with numbers, we do see Kim Lee does is one of the coaches in our Coworking Startup School program and you know,"

00:35:46,"we sort of talk about how do we get people even more focused on their numbers? And sometimes I think, you know, people like, they don't want the answer to be no, you shouldn't do this location or you shouldn't, you know, do this location focused on this specific target member. So they kind of ignore the numbers, they don't want to do the work,"

00:36:09,"they don't wanna see the detail, but you gotta do it because it's a pretty significant investment to get into commercial real estate to sign a lease, to fund a build out. Even if you're getting help through free rent and tenant improvement dollars from the landlord, it's still an investment. You gotta know the numbers. So stay focused on the numbers and stay focused on your local market and what size it can support,"

00:36:36,"can it support a niche location, et cetera. You know, keep building those strong community ties, which can help you understand what the market needs, where the gaps are, et cetera. And obviously prioritizing creating a space that really, really speaks to your ideal customer and pri prioritizing the customer over time. So again, WeWork's failure is not specific to the model in general,"

00:37:01,"it's specific to how they approached their growth and future. The future of Coworking spaces is very bright, especially for operators who prioritize unit economics and sustainable growth. So, so this is a fun discussion. I think we're at the G W A conference, we'll have lots of discussions about this. I, you know, I don't, it's a fun from kind of an academic intellectual perspective to talk about,"

00:37:25,"you know, what's gonna happen to WeWork. I don't think it goes away. I think maybe it goes into bankruptcy and gets bought. I'm not gonna keep speculating. But if you are a landlord or an independent operator and you are looking for support in getting your numbers right and validating your model and whether you're not or not you wanna pursue this business, find us on our website at Everything Coworking dot com."

00:37:51,"We are here to help you with that. And for anybody who's at the conference like next week, make sure we connect. Send me a note in the app. That's the, the conference app. It's awesome and actually juicy used it this year too, so I love it. I was already in it and it was very easy to just kind of jump in and,"

00:38:12,"and start connecting with people. So send me a message in the app if you are gonna be at the conference and you wanna connect and we'll see you in person maybe and connect with you on the podcast again next week."

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